## Facts

- London merchants sought to sell goods on credit to John Christopher Falch and asked Joseph Freeman about Falch’s solvency and creditworthiness.
- Freeman knowingly and fraudulently represented that Falch was “safely to be trusted” and should be given credit, intending to induce the merchants to extend credit.
- Relying on Freeman’s statement, the merchants sold Falch 16 bags of cochineal valued at approximately £2,634 16s on credit.
- Falch was insolvent and did not pay for the goods, causing the merchants pecuniary loss.
- The merchants sued Freeman in an action on the case in the nature of deceit based on Freeman’s false affirmation.

## Issues

1. Whether an action for deceit lies against a person who knowingly makes a false representation about a third party’s credit, intending reliance, that causes pecuniary loss, even without contractual privity.
2. Whether liability for deceit requires that the defendant receive a personal benefit or have colluded with the insolvent third party.

## Decision

- A jury found for the plaintiffs on the deceit count.
- The defendant moved in arrest of judgment, arguing the alleged misrepresentation was not actionable as a matter of law.
- The Court of King’s Bench (majority) denied the motion and allowed judgment for the plaintiffs.
- The court held that a knowingly false affirmation made with intent to defraud, which causes damage, supports an action for deceit.
- The court held it is unnecessary that the defendant benefited from the fraud or colluded with the third party.

## Legal Principles

- A false affirmation made knowingly, with intent that the plaintiff rely, and producing damage is actionable in deceit.
- Privity of contract between plaintiff and defendant is not required for liability in deceit.
- The defendant’s personal gain is not an element of deceit; the focus is the defendant’s fraud and the plaintiff’s resulting injury.
- In responding to a voluntary commercial inquiry (such as a credit reference), a person may remain silent, but if speaking, must speak truthfully to the extent of their knowledge.
- A dissenting view treated statements about “credit” as opinion and cautioned against imposing liability for subjective evaluations of creditworthiness.

## Conclusion

The court upheld liability for fraudulent misrepresentation where a defendant knowingly gave a false credit assurance about a third party to induce reliance, causing the plaintiff financial loss, and held that neither privity nor defendant enrichment is required to maintain an action in deceit.


Pasley v. Freeman, 100 Eng. Rep. 450 (K.B. 1789)